Virgin Cargo chief’s warning over yields

OVERCAPACITY in the global air cargo industry on major routes continues to suppress yields, warns Virgin Atlantic Cargo, writes Thelma Etim, deputy editor.
Despite a three per cent reduction in the airline’s cargo capacity in the first half of this year, the carrier saw its tonnage rise one per cent to 111,196 tonnes, whilst its load factor increased three per cent to 76 per cent network-wide, says a company statement. 
John Lloyd, director of cargo, comments: “In terms of revenue, we are slightly ahead of our target for the year but the level of capacity some airlines are bringing onto the main markets is driving yields down to a level that will be unsustainable for many operators. This needs to be seen as a warning message for the industry.”
The drive for ‘all-in’ ULD rates in the American market and increased customer buying power due to excess market capacity meant this was the market most impacted by falling yields, he adds.   
“[But] we have a good yield position in the market compared to many of our competitors and have done well considering how our network is proportioned with a high percentage of transatlantic operations,” says Lloyd. 
In the first half of 2014, the cargo division also enjoyed a four per cent rise in tonnage on its flights from the Americas and consistent year-on-year tonnage levels out of Asia Pacific despite a six per cent reduction in capacity from the region  – largely due to the end of the airline’s Hong Kong-Sydney route in May. 
The carrier’ partnership with sister Virgin Australia continued to perform strongly with a 20 per cent hike in tonnage and a nine per cents revenue gain, says the statement. 
Cargo capacity on Virgin Australia’s flights from Los Angeles, (marketed by Virgin Atlantic), was fully sold out throughout the first half of the year.   
As part of its transatlantic joint venture with Delta Air Lines, Virgin will begin a daily, direct A330-300 service from London Heathrow to Atlanta Hartsfield-Jackson International Airport from October.  
Following analysis of the route, Lloyd is says he is confident the company “will get good load factors and it will be a profitable route for us.” 
Cost efficiencies continue to be achieved as a result of the co-location of Virgin Atlantic and Delta cargo handling operations. In the first half of this year, Orlando and Miami became the latest stations where the two airlines now share the same handling facilities, following a similar move in New York JFK and Boston last year. 

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Established in 1983, Air Cargo News is the leading source of news, information, interviews, analyses and reports to the global airfreight industry. Our leading portfolio includes print, digital and events that give businesses in the airfreight industry the ability to connect with decision-makers in this sector.